Bearish attitude also in the Auto&Parts Industry (-4.7%), after the strong rebound earlier in the year (up +20.5% since January 1, 2012).

Pirelli closes the week at 9.355€ (+0.6%) against the trend of the sector and of the reference market. Over 5 million shares, the daily average of dealings. HSBC upgraded Pirelli stock to 15€ (from 12€), confirming its “Overweight” recommendation. The average Consensus Target Price, therefore, goes up to 10.3€ with 96% of analysts covering the stock giving positive recommendations.

The main European stock markets were up in the week from the 23rd to the 27th of March, 2012 (Milan +2.6%, London +0.1%, Frankfurt +0.8%, Paris +2.4%, Madrid +1.5%). Indices started weak, due to the political news flow in The Netherlands and France; trading in the remainder of week was supported by the successful placement of European sovereign bonds (Italy, Spain, The Netherlands), positive leading indicators in the USA (real estate and manufacturing) and better than expected Q1 ’12 results (according to Goldman Sachs, 45% of companies beat consensus by more than 5%).

Auto & Parts stocks (+5%) led gains among European equities (Stoxx 600 +0.5%), followed by Industrals (+2%).

Pirelli shares outperformed the market, advancing +6.8% at €9.3. Daily average trading volume amounted to 3.6 million shares. Italian broker Centrobanca upped the stock’s Target Price (€10 from €9.37), confirming the “Buy” rating. The analyst highlighted the good prospects of the business in the medium term, thanks to the expansion in Russia and the ongoing improvement in production efficiency. Consensus Target price is at €10.06, with 91% positive recommendations.

The main European stock markets were down in the week from the 9th to the 13th of April 2012 (Milan -5.8%, London -0.9%, Frankfurt -3.0%, Paris -3.8%). Trading was affected by the renewed worries around the sovereign debt of Southern European countries and the global economic trend (Chinese GDP in the first quarter of the year and US consumer sentiment data were worse than expected).

Auto & Parts stocks (-3.8% in the week) were affected by weak European car registration data, showing a 9% decline over last year.

Pirelli stock showed a different trend, closing the week flat at 8.77€, with an average daily volume of 4.3 million shares.

The main European stock markets were down in the week from the 26th to the 30th of March, 2012 (Milan -3.1%, London -1.5%, Frankfurt -0.7%, Paris -1.5%, Madrid -3.3%). The decision to increase the European rescue fund to € 800 bln (partially expected) was not enough to balance the renewed worries surrounding the Eurozone sovereign debt.

Pirelli closes the week at €8.92 (+1.1%, with daily average volumes of 4.4 mln), outperforming the Auto & Parts index (-0.8%). In the week, broker Société Générale upped the valuation of the stock, setting the Price Target at €10.2 (from €8.20), while confirming the “Buy” rating. According to the analyst, FY 2011 results provided support to the positioning of Pirelli in the Premium segment and in Latin America.

The first quarter of 2012 marks a positive performance for Pirelli, with the stock up 37.1%, better than the European Auto & Parts index (27.8%) and Milan (+5.9%).

The main European stock markets were up in the week from the 27th to the 2nd of March, 2012 (Milan +2.5%, London -0.5%, Frankfurt +0.8%, Paris +1%). Investors reacted positively to the liquidity injection by the ECB into the banking sector (three years, 1% interest rate), which benefited the bond market (EU government bond yields generally retreated in the week).

Auto & Parts stocks were slightly down (Stoxx index -0.6%), due to uncertainties related to rising oil prices (Brent futures $123/barrel).

Pirelli closed at €7.895 (-0.4%, in line with the sector). Broker Mediobanca upgraded the stock’s Target Price from €8 to €10, confirming the Outperform rating. According to the analyst, Q4 2011 results should confirm the good profitability trend, thanks to price/mix growth which should compensate weak volumes.

Tyre peers’ stocks performance was subdued: Michelin (-2%), Nokian (-0.4%). Continental outperformed (+2.6%) after presenting FY11 results and an optimistic market outlook for FY12.

European stock markets were mixed in the week from the 20th to the 24th of February (Milan -0.4%, London +0.5%, Frankfurt +0.2%, Paris +0.8%), on lower European GDP growth forecasts (GDP -0.3%, inflation 2.1%) and another Greece sovereign debt rating downgrade by Fitch (to C from CCC). Equities trading was also negatively affected by disappointing European PMI data, down to 49.7, signaling a contraction in economic activity (expectations of 50.8).

Auto & Parts stocks performed in line with the overall market (European sector index down 0.4%).

Tyre stocks recorded losses in the week: Pirelli was down 2.9% at €7.925, similarly to Michelin (-3%) and Nokian (-1%).

Positive week for the main European stock markets (Milan +1.1%, London +0.9%, Frankfurt +2.3%, Paris +2%) the one from the 13th to 17th of February. Markets were positively influenced by the expectation of a close agreement between the European Union and Greece.
European Auto & Parts sector was positive (+2.9% the sector index) amplifying the positive macroeconomic news flow.
Pirelli closed the week at €8.16 (+8.9%), outperforming the sector (+6.0pp) and its main peers (+4.2pp vs Continental, +7.7pp vs Michelin, +6.3pp vs Nokian). The stock benefited from an upgrade by Intermonte (Overweight to Buy) with a Target Price of €11 (€9.0 the previous valuation).

European stock markets were down in the week from the 6th to the 10th of February 2012 (Milan -0.5%, London -0.8%, Paris -1.6%, Frankfurt -1.1%). Market sentiment was affected by the negotiations between European authorities and the Greek government concerning the austerity measures needed to obtain the €130bln aid package. Moreover, US consumer sentiment data disappointed: the benchmark index was down to 72.5 in mid February, compared with the end-of-January reading of 75 and expectations of 75.5. The index remains at historically low levels (before the current crisis, US consumer sentiment index was at approximately 87 points). The central bankers of England and Europe left benchmark indeces unchanged (0.5% and 1% respectively) and increased the purchase of Sterling denominated bonds (Bank of England).

The European Auto & Parts stock index was flat in the week. Chinese car market data was positive for German OEMs, which recorded year-on-year gains in January to the tune of 20% to 30%.

Pirelli shares were slightly up in the week (+0.1%), closing at € 7.49 with an average daily volume of ca. 3.5 million shares. According to HSBC’s latest report, Pirelli is best positioned to make up for a reduction in volumes in the industry thanks to its increasing exposure to the Premium segment, which benefits the mix. The broker confirms its view on the stock (Overweight, Target Price increased to €9 from €8.5) based on the company’s good fondamentals and the superior growth profile in the sector.

During the week, Michelin and Nokian published their FY 2011 results and guided for an improved profitability in 2012. According to Goldman Sachs, the read-across for Pirelli is positive, given its strong pricing power provided by the Premium positioning and the greater proportion, compared to its peers, of raw material cost absorbed in 2011 (3-monthslag vs 6-months).

In the improbable eventuality of rain at Jerez over the next few days, drivers will also be able to count on the return of the historic Cinturato.

The teams have available to them a maximum of 100 sets of tyres for the tests and can, as part of that quantity, choose which tread compounds to adopt during the four days.

This will be the session when drivers will try out the ‘squarer’ profiles which, as announced in Abu Dhabi, will ensure extremely high performance and last longer but without renouncing spectacle. The Jerez circuit has many variants, especially ample fast and slow corners, enabling the teams to sample their tyres in the various driving conditions.

The new Pirelli P Zero Silver, the first road car tyre derived from Formula 1 technology, will be presented at Jerez simultaneously.

Key european stock market indices were mixed in the week from the 23rd to the 27th of January, 2012 (Milan +2%, London +0.1%, Frankfurt +1.7%, Paris -0.1%). According to the IMF, world GDP growth in 2012 will be slower than anticipated (+3.3% vs 4% previously), and Eurozone GDP will contract by 0.5%. The US Federal Reserve stated the intention to keep benchmark interest rates at the current low levels until 2014, and added that other stimulus measures are still on the table. In the bond market, the spread between Italian BTPs and German Bunds narrowed by approx. 100bps, after the successful outcome of Italian sovereign debt auctions (3y Ctz yield down to 3.76% from 4.85%).

Within the Auto & Parts sector (European index up 1.1% vs Stoxx 600 -0.2%), Auto OEMs and Parts producers outperformed, thanks to positive US durable goods data. Tyre stocks were weak, including Pirelli which ended the week down 1.9% at €7.08, in line with peers. According to brokers Exane, Equita and Intermonte, Pirelli will hit 2011 profitability targets notwithstanding the softness in Q4 volumes; attention now turns, according to Intermonte, to H1 2012 sales which should be sustained by the low level of summer tyre stock held by dealers.